The facts pertaining to the adoption of the city's telecommunications
ordinance are not in dispute and are set forth in our opinion in AT&T Communications v.
City of Eugene, 177 Or App ___, ___ P3d ___ (October 31, 2001). Suffice it to say for
the purposes of this opinion that the city adopted a telecommunications ordinance that,
among other things, requires all who propose to provide telecommunications services--including cellular telecommunications services--through a communications facility
located in the city to complete a registration form and pay a registration fee. Eugene
Code (EC) § 3.405(1). The fee includes a one-time charge to cover the costs of
registration and an annual registration fee equal to two percent of "gross revenues derived
from [the provider's] telecommunications activities within the city." EC § 3.415(1). The
ordinance also requires all providers who make use of city rights-of-way to pay a right-of-way license fee. EC § 3.415(2).

Sprint and Wirelessco provide wireless telecommunications services using
facilities located within the city. They do not use any city rights-of-way, however. They
are subject to the registration and registration fee requirements but are not subject to the
right-of-way license requirement.

Sprint and Wirelessco challenged the validity of the city's
telecommunications ordinance, arguing that it is preempted by state and federal law.
Specifically, they contend that the registration and registration fee requirements are
preempted by:

(1) ORS 307.215, which prohibits the imposition of a tax "on amounts paid
for exchange access or other telephone services";

(2) ORS chapter 759, which regulates telecommunications generally and,
according to Sprint and Wirelessco, leaves little authority to local governments;

(3) Article IV, section 1(5), of the Oregon Constitution, which limits the
authority of municipal governments to the regulation of municipal concern;

(4) Former Article XI, section 11(g), of the Oregon Constitution, which,
although repealed in 1997, Sprint and Wirelessco contend invalidated the ordinance ab
initio because the ordinance unlawfully permits product or service taxation to fund
services that previously were funded by ad valorem property taxation;

(5) 47 USC § 332 (1991 & Supp 2001), which preempts state and local
government regulation of "the entry of or the rates charged by" commercial mobile radio
service providers; and

(6) 47 USC § 253(a) (Supp 2001), which prohibits state or local regulations
that may prohibit or have the effect of prohibiting the ability of any entity to provide
telecommunications services.

The trial court entered summary judgment in favor of Sprint and Wirelessco
without specifying which of the foregoing laws the ordinance violated. On appeal,
therefore, the city addresses each of those laws, arguing that none preempts its
telecommunications ordinance.

In AT&T Communications, we addressed nearly identical arguments
concerning the authority of the city to impose a registration and registration fee
requirement on providers of cellular telecommunications services. We concluded that the
registration and registration fee requirements of the ordinance are not preempted by ORS
307.215; ORS chapter 759; Article XI, section 11(g); 47 USC § 332 (1991 & Supp 2001);
or 47 USC § 253(a) (Supp 2001). ___ Or App at ___ (slip op at 7-46). In this case,
Sprint and Wirelessco raise only one contention that is not disposed of by our opinion in
AT&T Communications, namely, that the regulation of cellular telecommunications
services providers is impermissible under the authority conferred by Article IV, section
1(5), of the Oregon Constitution.

Article IV, section 1(5), provides, in part:

"The initiative and referendum powers reserved to the people * * *
are further reserved to the qualified voters of each municipality and district
as to all local, special and municipal legislation of every character in or for
their municipality or district."

Sprint and Wirelessco contend that the regulation of interstate and international
telecommunications by a local government simply does not amount to "local, special and
municipal legislation of every character." According to the companies, the constitution
limits the authority of local governments to the regulation of businesses physically
located in the local governments' geographic areas of municipal authority. In this case,
they argue, the city effectively "taxes telephone calls made to locations outside the City
limits," which they contend exceeds the authority reserved under the state constitution.

The city contends that it does not tax transactions of any sort, much less
transactions that occur outside of its territorial boundaries. Instead, it argues, its
telecommunications ordinance imposes a business license tax on entities that conduct
business within its geographic territory. Such taxes, the city argues, are routinely upheld
as appropriate exercises of municipal authority. We agree with the city.

As we noted in AT&T Communications, ___ Or App at ___ (slip op at 10-11), Article IV, section 1(5), along with Article XI, section 2, recognize the authority of
"home rule" municipalities and permits their citizens to determine the organization of
their local governments and the scope of the powers of those local governments without
the need to obtain statutory authority from the state legislature. LaGrande/Astoria v.
PERB, 281 Or 137, 142, 576 P2d 1204, aff'd on rehearing 284 Or 173, 586 P2d 765
(1978). That home rule authority has been interpreted to include the taxation of
businesses that conduct business within the geographic boundaries of the taxing
municipality.

In Jarvill v. City of Eugene, 289 Or 157, 613 P2d 1 (1980), for example, the
Supreme Court upheld the authority of the City of Eugene to impose a tax on gross sales
and receipts derived from business activity in the city, holding that "[a] municipal
corporation may assume powers to impose taxes and to select the kinds of taxes most
appropriate in order to provide governmental services." Id. at 169.

Similarly, in Multnomah Kennel Club v. Dept. of Rev., 295 Or 279, 666 P2d
1327 (1983), the court upheld a Multnomah County net income tax on pari-mutuel racing
establishments. The plaintiff kennel club had argued that the tax was not a matter of local
concern. The court rejected the argument, observing that local government income taxes
have been widely used since at least the 1930s. Id. at 285.

Even more to the point, in City of Idanha v. Consumers Power, 8 Or App
551, 495 P2d 294 (1972), this court upheld a city ordinance requiring all public utilities
selling electricity within the city to obtain a license and pay a license fee equal to three
percent of revenues generated within the city. Id. at 561.

Sprint and Wirelessco attempt to distinguish the foregoing authorities by
characterizing the registration fee as a tax on specific transactions that may involve
customers beyond the city's jurisdiction. Whether a tax on such transactions would pass
constitutional muster is, perhaps, an interesting question. But it is not presented in this
case. The ordinance does not tax individual transactions. It is based instead on the
provider's "gross revenues derived from its telecommunication activities within the city."
EC § 3.415(1) (emphasis added). It is thus materially indistinguishable from the types of
taxation that have been upheld as legitimate exercises of municipal government authority
under Article XI, section 2, and Article IV, section 1(5), of the Oregon Constitution.

Reversed and remanded for entry of judgment in favor of City of Eugene.